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$1.22 Million Penalty for Transshipment of Goods to Iran

Monday, December 11, 2017
Sandler, Travis & Rosenberg Trade Report

The Office of Foreign Assets Control reports that a U.S. company has agreed to pay $1.22 million to settle its potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations. OFAC states that between November 2009 and July 2012 two of this company’s subsidiaries exported 37 shipments of dental equipment and supplies from the U.S. to distributors in third countries with knowledge or reason to know that the goods were ultimately destined for Iran.

The statutory maximum penalty amount for the apparent violations is $9.55 million and the base penalty amount is $1.70 million. OFAC considered the following to be aggravating factors: (1) the subsidiaries acted willfully, concealed the fact that the goods were destined for Iran, and in multiple cases continued to conduct business with the distributors after receiving confirmation that they had reexported products to Iran, (2) several supervisory and managerial personnel within the subsidiaries had actual knowledge of, and actively participated in, the conduct that led to the apparent violations and appear to have deliberately concealed their awareness from the parent company, and (3) the company is a large and commercially sophisticated company with knowledge of U.S. sanctions and export control requirements. In addition, the apparent violations were not voluntarily disclosed.

OFAC considered the following to be mitigating factors: (1) the company has not received a penalty notice or finding of violation from OFAC in the five years preceding the date of the first transaction giving rise to the apparent violations (although it was the subject of a settlement involving substantially similar apparent violations in 2001), (2) the harm to sanctions program objectives was limited because the exports were likely eligible for a specific license, (3) the company took remedial steps, including voluntarily expanding the scope of the review to include a full, company-wide inquiry following a subpoena to one of its subsidiaries that led to the subsequent revelations involving the other subsidiary, and (4) the company cooperated with OFAC’s investigation, including by providing detailed and well-organized information for its review and by agreeing to toll the statute of limitations for a total of 1,104 days. In addition, OFAC determined that the apparent violations constitute a non-egregious case.

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